Changes will help recruit, retain federal employees

My turn

Posted: Monday, January 15, 2001

2000 was a good year for federal employees in Alaska, as well as throughout our nation.

Among the measures supported in Congress and of special significance to federal employees were:

Rollback in retirement contributions for budget balancing;

Increased opportunities for personal retirement savings;

Conversion of FEHB premiums;

Settlement of COLA challenge;

Revisions in student loan repayment program;

Long-term care insurance.

Our Treasury-General Government Appropriations bill, at my request, eliminated the increased mandatory retirement contribution required of federal employees by the 1997 Balance Budget Agreement. I told Congress, "There is no necessity to continue this increase. Our work balanced the budget since 1997 and the increased revenue flowing to the Treasury after welfare reform and the effect of the digital revolution produced surplus in our federal budget."

This success means more take home pay for all federal employees!

Congress at my request allowed federal employees who take part in the Thrift Savings Plan (TSP) to contribute more of their own savings to tax-deferred retirement accounts. This plan is a defined contribution benefit plan that I helped to create. Civil Service Retirement System (CSRS) participants may contribute up to 5 percent of their income to their own TSP accounts, while employees participating in the newer Federal Employee Retirement System (FERS) may contribute up to 10 percent of their income to these accounts.

The program has been successful, but I was concerned federal employees were falling behind in their retirement savings opportunities compared to their counterparts in the private sector. I amended our final appropriations bill to allow federal employees to contribute more of their own savings to their TSP accounts up to the IRS limit of $10,500, regardless of their income level. This brings parity to the public and private sector working people and allows federal employees to plan for a better retirement.

Starting in October, federal employees have the opportunity of using pre-tax dollars to pay health insurance premiums to the Federal Employees Health Benefits Program under the administration's new Premium Conversion program. Under this plan, similar to the private sector, employees may deduct their share of health insurance premiums from their taxable income. Private sector employees have deducted health insurance premiums from their taxable income for many years. According to Treasury officials, the average federal employee participating in the FEHB program may save $434 per year in taxes.

The settlement agreement reached by the federal government and COLA recipients in Alaska this year resulted from legislation which required the federal government to negotiate with COLA recipients. The settlement developed a new methodology, which takes into account non-price factors inherent to Alaska when computing COLAs. This means Alaska COLAs will not be lower than their current levels for at least the next three years, and possibly longer.

Federal agencies will soon have the authority to create programs to assist employees with the repayment of their student loans under legislation approved by Congress. These opportunities already available to private sector employees should help in recruiting and retaining qualified federal employees.

Participation in this program should be increased as a result of language included in the 2001 Defense Authorization bill. Rules are being drafted by the Office of Personnel Management to permit agencies to provide an employee up to $6,000 per year for student loan repayment - up to a lifetime maximum of $40,000 (this would be taxable income).

Long-term care insurance will now be available for federal workers, members of the military, retirees and their families under legislation passed by Congress. The office of Personnel Management will draft regulations for this insurance and will announce when there will be an open season to allow employees to utilize this new concept. Overall, changes made by Congress for federal employees should help agencies to recruit and retain qualified personnel.



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